Thursday, February 07, 2013

4th book

My 4th book (in Japanese) will be published in ten days, but it's the first book in that it focuses on myself - about my lifestyle.

It was really painful experience to talk about myself. Reading drafts, some guys of my NPO said to me: "oh TJ, the book seems to be a bit arrogant, and I don't like it", although I was extremely careful about abolishing self-consciousness in the book. I resisted 100 temptations to say "shut up. then you do it" (actually I couldn't swallow all of them, haha).

To be honest, I'm not sure if I want to publish the book. Whenever I author a book, I wonder whether my future kids would proud of it. If the answer is no, I don't write it, although the book could be a  good promotional opportunity for my NPO or my business.

I know it is no use crying over spilled milk. I just would wait judgment of the readers.

Thursday, January 10, 2013

Hold tightly

When I was a boy, I sometimes hold precious things (at that time they were mainly toys or insects) so tightly that they were broken or squashed. Even after I got old, from time to time I did the same, although the broken were not toys anymore, but relationships with my significant others. 

I think it's not only me who experienced such bitter events; some of my friends went through unwanted breakup because they love their steadies too much. Having experienced agonies, one of my friends said to me, " the most important thing in relationship building is to keep the appropriate distance. If the distance gets too close or too far, something would go wrong. " "Preaching truth after storm is very easy.", I said to her. 

Occasionally, I am reminded of what I did wrong and regret them, even knowing that regretting something means and creates nothing. However, at the same time, I cherish those memories, as they were the very vivid proof of my life, in which I tried to do the best as an imperfect man. A good thing is that memory would never be broken down but even tell me more, when I hold it tightly. 

Wednesday, January 02, 2013

2012 review & 2013 objectives

3 years ago I started to write about 2012 review and 2013 objectives and share it with my friends. One purpose is purely greeting, and another is to make an oath, which always drives me to achieve my goal. 

1. Professional lifeLed two big deals about LBO financing and exit (selling shares of a portfolio company). Having gone through those deals, I now became more confident in what I can do as an investment professional.

I will start something new next year. While I stay in the current firm, I would like to achieve the followings:
- Learn more about fund administration; study how the investment scheme works
- Never prepare “draft“ works; prepare them as the final version
- Make progress in writing charts: create “chart notebook” and hand-write more than 100 great charts I encounter through work and study

2. NPO lifeThree key achievements of 2012 are as follows:
- Living in Peace (LIP) became a “registered” non-profit organization. Donations for registered NPOs are all tax deductible and it will be of help to accelerate fund raising
- Cumulative invested capital for“LIP Microfinance Fund (investment fund for microfinance institutions around the world)” reached +$1 million
- Doubled the donors for “Chance Maker”, a fund raising program for foster homes in Japan. Thanks to support from donors, we initiated construction of new foster homes, to be completed by the end of 2013. The kids are all excited.

In 2013, I would strengthen board of directors meetings (currently they are not working perfectly), launch new investment projects, and make a breakthrough in fund raising. I also would augment my presentation skill, by putting more time on practice.

3. LearningI read more than 200 books and academic papers regarding innovation (main purpose is to author a book about the topic). After reading these materials, I noticed that the concepts on innovation, such as abduction, tacit knowledge, dialectic, design thinking, story, etc., are all connected and is meaning essentially the same.

This year, I also tried to read the most cited books according to Google Scholar and wrote English blog every week. Due to some schedule conflicts with my professional job and book writing, I could read only 34 books. I couldn’t achieve the original goals, but the experience was amazing. Now I can see the world from broader perspectives than I could a year ago.

Best books of 2012: “Poor Economics (Banerjee & Duflo)”, “Science and Methodology (Poincare)”, “Tacit Dimension (Polanyi)”, “Making Democracy Work (Pugnam)”, “Mind in Society (Vygotsky)”, “The Logic of Scientific Discovery (Popper)”.

In 2012, I learned from the other opportunities as well. This year I attended St. Gallen Symposium in Switzerland and Summer Davos in China. The best thing I learned from these events is that there are great people in my generation doing cool things to really change the world. They gave me motivation and inspirations more than great business and political leaders in the world. I also realized that I need to make a quantum progress in my English.

Next year’s key targets are:
- Read books about finance, governance & management and emerging countries: more exactly, the books about industrial organizations, game theory, history of governance, asset pricing, etc.
- Continue a study group to read and discuss articles of the Economist magazine every Sunday morning
- Post +100 English blog entries
- Learn +2000 new English words

4. Authoring “Social Finance Revolution”, my third book, was published in July. The book is about how social network influences the future of finance. I also wrote drafts of three books, which will be published early next year.

Next year, I will write book(s) about asset pricing and corporate governance. The purpose is to summarize what I have learned so far through my study and professional career.

5. Other activitiesDue to schedule conflict, I could enter only two races. One is long-distance triathlon (3.8 km swimming, 190 bicycle, and 42.2 km running), and another is 100km ultra marathon. In May 2012, I will have a 6-days ultra-marathon competition, in which I’ll run 520km in total.

I could perform drums in a live session as scheduled. The problem is that I wasn’t well prepared, and I think I need to make time for practice.

6. Behavior
I think I need to change some of my behaviors to start new things. Although they may sound childish, the reality is that I couldn’t overcome them in 30 years. I’ll make a check list and fill it everyday when writing my diary:
- Be in time. Be the place 10 minutes before the appointment (and study new English words while waiting) and prepare works 24 hours before the deadline.
- Handwrite thank you letters for everyone whom I appreciate
- Concentrate on one thing at one time
- Ameliorate posture. It influences state of mind
- Make 10 minutes for silent reflection.

Sunday, December 09, 2012

Adopted CEO

More companies in Europe and Asia are family-owned. Among them, performance of Japanese family-owned corporations shows higher performance than the others. 

How the Japanese corporations avoid the common fall-down of dynastic corporations? The Economist in the last week's issue proposed an interesting hypothesis: custom of adult-adoption keeps their successfulness. Adult adoption is more common in Japan: out of 81,000 adoption made in 2011, 90% of them were adult adoption. 

At a glance, the argument may seem absurd, but spending some time for contemplating on it, I now think the argument may be plausible due to three reasons: 

First, the adult-adoption works as a strong commitment mechanism. Usually, when we come up with commitment mechanism of ordinary corporations, we use stock options. Stock option works well to some extent, but influence on manager's incentives will be far stronger in adoption. It easy to imagine the reason: if you have no way to escape around, you would spend much more to make the company successful. 

Second, the custom may contribute to hire better qualified CEOs. Recruiting a right CEO is always difficult and time-consuming. The adult adoption mechanism helps corporations to take more time to find out the right person.

Third, adopted CEOs are fresh-minded outsiders and can bring about turn-around if needed. According to some studies, outsider CEOs are more successful when they are in corporations which are not performing well and need changes. 

Thursday, December 06, 2012

Verbalize motive

When I make a presentation, the most typical question I get from the audience is : why you do this? It is the hardest one to answer.

Whenever I start something new, the honest reason I can currently tell is "my whole body asks me to do it". Quite simple, but assuming that most of the people would be puzzled by this answer, I try to come up with an easy story, quoting my life experience. This easy story, however, won't convince me throughly, and I feel a bit guilty.

Sometimes I think about why explanation of one's motivation is that difficult. Perhaps one potential reason is that one's motivation is a complex mixture of various experiences one had in her/his life. One's motivation may only be understood as a whole, and explaining each motivation-shaping factor may drop something very crucial. If that is the case, to explain one's real motive would be a brain teaser.

Difficulty of verbalizing one's motivation does not mean that we ought to skip the question of "why you do this?". I believe only by throughly examining one's own reason, he / she can understand him/herself more profoundly and can make his /her discipline more solid.

Not to end the self-search journey, one should not deceive oneself by the easy story. Once I stop pursuing the goal, I won't be able to see the vast story inside your mind, and that is regrettable to me.  It's more challenging than we usually think, but we can try.

Wednesday, November 28, 2012


It seems that major modern philosophers at 70s and 80s had a same issue social contexts of something dominant, e.g. Foucault talked about social context of prison and punishment, and so did Said about social context of orientalism. Pierre Bourdieu did the same in his book Distinction A Social Critique of the Judgement of Taste.

Bourdieu argues that even our judgment of taste is not free from social context. We think we know what is culturally noble, but it is just the reflection of power of social classes, according to Bourdieu. He reckons that the definition of cultural nobility is the product of a struggle between groups differing in their ideas of culture and of the legitimate relation to culture and to works of art. In his definition, social class is more than the class that Marx mentioned long before. The classes are defined based on education, origin of birth, jobs, income, social status, etc. 

The logic is understandable. All social classes follow their incentive structures, and try to glorify cultures which are close to them. For instance, aristocrats in Japan may want to emphasize the ascendancy of traditional arts, because in this way they can keep their cultural dominance in the society.

What is interesting in his argument is that he gathered as many data as possible to prove his idea. For example, Bourdieu made survey to see how the cultural preferences differ among social class and made preference distribution of cultural products. According to this distribution, Well-Tempered Clavier is less popular among manual workers, domestic servants, shopkeepers, and the other people with low-paying jobs (approx. less than 3% of people preferred), but more popular among secondary teachers and higher-education teachers (more than 30%).  His book is full of this kind of facts showing certain relationship between social class and tastes.

Artists may disagree with the idea. However, even though the pure intention of artists is that of a producer who aims to be autonomous, they are following the old hierarchy of doing and saying the interpretations superimposed a posteriori on his work.

The concept that Bourdieu argued doesnt sound new, but what is conspicuous in his work is the solid facts to prove his argument. His works show that even sociological argument can be proved through facts and numbers, and tell us that we should not abandon ourselves to despair that somewhat vague concepts cannot be measured. 

Pierre Bourdieu, Distinction: A Social Critique of the Judgement of Taste, Harvard University Press; Reprint edition, 1987/10/15

Sunday, October 21, 2012

The Logic of Scientific Discovery

Opposing to inductive logic as the methodology of science, Karl Popper proposes the theory of the deductive method of testing. In his book The Logic of Scientific Discovery, he argues that scientific hypothesis should be empirically tested and falsified in cases. It is easy to test the validity of a chain of logical reasoning. Just break it up into many small steps, each easy to check by anybody who has learnt the mathematical or logical technique of transforming sentences.

Falsifiability as essence of science
Popper argues that what distinguishes the empirical science from pseudo-science is that the former theory intrinsically falsifiability.

I shall certainly admit a system as empirical or scientific only if it is capable of being tested by experience. These considerations suggest that not the verifiability but the falsifiability of a system is to be taken as a criterion of demarcation. In other words: I shall not require of a scientific system that it shall be capable of being singled out, once and for all, in a positive sense; but I shall require that its logical form shall be such that it can be singled out, by means of empirical tests, in a negative sense: it must be possible for an empirical scientific system to be refuted by experience.(18)

The reason why he emphasizes falsifiability, not verifiability, is that it is not possible to prove something in empirical science. Through the history, every scientific theory has been denied by the new facts and then updated. Popper took a radical example to explain his idea: Let us suppose that the sun will not rise tomorrow. Should such a thing occur, science would have to try to explain it, i.e. to derive it from laws. Existing theories would not merely have to account for the new state of affairs: our older experiences would also have to be derivable from them. (250)

Granted, the best thing is that we can just jump into immortal truth, but that will not come true forever. That is why human beings have taken paths that seem to be beating around the bush.

Probability of hypothesis and probability of events
Popper also strictly differentiates probability of hypothesis from probability of events. He argues that probability of hypothesis should not exist in science, although probability of events do and contribute for testing the validity of hypothesis.

Hypotheses regarding probabilities are not verifiable because they are universal statements, and they are not strictly falsifiable because they can never be logically contradicted by any basic statements. (259) I believe that physics uses probability statements only in the way which I have discussed at length in connection with the theory of probability; and more particularly that I uses probability assumptions, just like other hypotheses, as falsifiable statements. (260)

Science in evolutionary process
Popper believes that the essence of science is its falsifiability and thus its evolutionary process which lasts forever. One driving force of the evolution is craving for the truth, although the goal will never be attained. Another driving force is ones intuition: although new facts have always transformed science, those facts do not come to those who passively experience it; it comes to someone who believes in his/her anticipation, idea, speculative thought and so on. In other words, the facts that change the world are visible to only those who want to do it.

Science is not a system of certain, or well-established, statements; nor is it a system which steadily advances towards a state of finality. Our science is not knowledge (episteme): it can never claim to have attained truth, or even a substitute for it, such as probability.
  Yet science has more than mere biological survival value. Although it can attain neither truth nor probability, the striving for knowledge and the search for truth are still the strongest motives of scientific discovery.
  Marvelously imaginative and bold conjectures or anticipations of ours are carefully and soberly controlled by systematic tests. Once put forward, none of our anticipations are dogmatically upheld. Our method of research is not to defend them, in order to prove how right we were. On the contrary, we try to overthrow them. Using all the weapons of our logical, mathematical, and technical armoury, we try to prove that our anticipations were false in order to put forward, in their stead, new unjustified and unjustifiable anticipations, new rash and premature prejudices, as Bacon derisively called them.

The advance of science is not due to the fact that more and more perceptual experiences accumulate in the course of time. Nor is it due to the fact that we are making ever better use of our senses. Out of uninterpreted sense-experiences science cannot be distilled, no matter how industriously we gather and sort them. Bold ideas, unjustified anticipations, and speculative thought, are our only mans for interpreting nature: our only organon, our only instrument, for grasping her.

The old scientific ideal of episteme of absolutely certain, demonstrable knowledge- has proved to be an idol. The demand for scientific objectivity makes it inevitable that every scientific statement must remain tentative for ever. It may indeed be corroborated, but every corroboration is relative to other statements which, again, are tentative. Only in our subjective experiences of conviction, in our subjective faith, can we be absolutely certain.  (Page 278 280)

The idea proposed in this book is still the fundamental idea in problem solving in business fields. We always begin with a hypothesis when we tackle problems. After coming up with the hypothesis, we test it by collecting facts and checking the chain of reasoning. If we find the facts or logical fallacies which reject the hypothesis, we turn down the original one and try to find out the new.

What this book is missing unfortunately is how the motivation and intuition that change the structure of science come to us. People now are striving to find out the more systematic way to get to the world-changing idea. Granted, that part is not the scope of this book, but I just wanted to know how Popper thought of the process of the idea generation.

Karl Popper, The Logic of Scientific Discovery, Routledge (2nd edition), 2002/3/29